Mayor Zohran Mamdani’s first executive budget proposal pulls off what seems to be a fiscal miracle by closing what in December was projected to be a huge $12 billion budget gap without raising property taxes, dipping into reserves or cutting services.

But the budget is hardly a symbol of fiscal rectitude. It relies on billions of dollars in one-shot or short-term money to fund permanent programs, it stretches out pension payments so the next generation will pay for the retirements of present-day workers and it projects a $7 billion deficit for the 2028 fiscal year that will need to be closed just one year from now.

One sign of the problem: The mayor did not mention the deficits in future budgets in his presentation Tuesday of the $124.7 billion budget. Fiscal experts say they do not remember a time when a mayor didn’t acknowledge future year problems.

“Unlike pickles, budget balancing strategies aren’t good when they are half sour,” said Andrew Rein, president of the Citizens Budget Commission.

The executive budget is the penultimate step in the city’s budget process and kicks off negotiations with the City Council with a final budget agreement due by June 30. 

Historically, the Council adds money to the budget, usually about $500 million each year, but the mayor appears to be trying to avoid that by increasing money for parks, libraries and CUNY, which are usually the top of the council’s priority list.

The mayor was able to close the budget deficit because Gov. Kathy Hochul both provided billions of dollars in additional funds — including authorizing a new pied-à-terre tax  on luxury second homes — and delayed a costly mandate for the city to reduce class sizes.

Much of the money is short-term. 

For example, the governor has promised $1.6 billion for only the first two years of the rollout of Pre-K for three-year-olds and expansion of the slots for four-year-olds. There is no money for future years when the program is expected to be growing rapidly.

Other so-called one-shots — meaning revenue for only one year is being used to support spending that is expected to continue in the future — include something called budget accruals.

The administration says it’s found $1.2 billion in money the city had set aside to pay old expenses that it won’t need to use for that purpose. The money will be used in 2027 to balance the budget — but it won’t be available in future years.

One-shots amount to $2.8 billion, Comptroller Mark Levine estimates, one major factor in why the budget deficit for the 2028 fiscal year is still so large.

The savings for delaying pension payments is particularly egregious for people who care about best budget practices. Unlike the state, whose pension system is fully funded because it makes the required payments each year, the city needs to deposit extra money each year to make up for years when it did not fully meet its obligations.

The pension deal agreed to by the mayor and the governor evens out volatile annual payments to allow more predictable budgeting. But it also stretches those extra payments out into the future, saving $2.3 billion in next year’s budget.

“Extending the amortization period for pension payments creates a debt that’s more expensive than muni bonds,” William Glasgall, an expert in public finances at the Volcker Alliance, said, referring to municipal bonds. Taxpayers will be footing the bill for today’s savings well into the 2030s.

What this budget does by relying on short-term fixes is set up yet another push for the mayor’s campaign promises to tax the rich next year, after the mid-term elections. 

Hochul is up for reelection in November, while the local impact of President Donald Trump’s signature tax bill will really start hitting home in 2027.

“We have known ever since the child care funding announcement that we will need future revenues,” said Emily Eisner, interim director of the progressive Fiscal Policy Institute, which has been aggressively supporting tax increases. “The governor is interested in avoiding taxes in a significant way before November but they are more likely after the election, especially since the major strains from the One Big Beautiful Bill don’t hit until next year.”

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Mayor Zohran Mamdani dropped his threat to hike property taxes as a way to close the budget gap after Gov. Kathy Hochul promised additional aid for his $124.5 billion spending plan.

The city budget includes an additional $4 billion in support to close the gap, totaling nearly $8 billion over two years.

That money is through $352 million in direct aid, $3.2 billion from programs that require state authorization and $500 million in new revenue — enough to close the $12 billion budget gap for the next two fiscal years that Mamdani inherited from his predecessor.

“I am proud to announce that we have closed the gap entirely, down to zero,” the mayor said at a press conference Tuesday.

“It hasn’t been easy but we have balanced the budget and we have done so without placing the burden on the backs of working New Yorkers.”

The mayor thanked Hochul, State Senate Leader Andrea Stewart-Cousins, State Assembly Majority Carl Heastie and Council Speaker Julie Menin for their help and partnership, along with “the movement that carried us to City Hall.”

The budget, he said, “is evidence of a new era of government in our city, one that can balance both ambition and fiscal responsibility.”

The mayor’s budget manages to close a $5.6 billion shortfall for this fiscal year and an estimated $7 billion gap for next year without new income taxes for the wealthy and for corporations that he had demanded from Albany, and without raiding the city’s financial reserves. 

Jabs at the Wealthy

But Mamdani said they are taxing the rich through other changes, like a pied-à-terre tax on luxury second homes that is estimated to bring in $500 million in new revenue. 

There is also a proposal to reduce the Unincorporated Business Tax credit, known as UBT, which he noted mostly benefits millionaires. Reducing the tax credit will bring in an estimated $68 million, according to the mayor. 

“These are common sense measures,” he said. “Working New Yorkers cannot be asked to sacrifice as we sit in the wealthiest city in the wealthiest country in the history of the world.”

Pension Moves

Other revenue and savings comes from the state taking over expenses that shifted to the city years ago, like line of duty death benefits for families of first responders killed on the job, saving the city $202 million. There’s also an additional $600 million in youth programming and $300 million to restore money for sales tax intercepts.

The city will also seek state approval for pension amortization, which could save more than $2 billion by restructuring some payments over the next two years, which Mamdani assured wouldn’t affect benefits for current or retired city workers.

“I think there’s a logic to smoothing out payments,” city Comptroller Mark Levine said Tuesday morning after a budget briefing with the mayor and his team. 

“I think it’s easier to plan for the long term when you have a smooth payment schedule.”

More than $1 billion in savings comes through a delay in the state’s mandated cap on class sizes which would require hiring more teachers and administrators. Last year, the city approved hiring 3,700 more teachers and 100 more assistant principals.

Mamdani added more money to hire 1,000 additional teachers and $1.5 billion to the $7.6 billion existing budget for the School Construction Authority’s five-year capital plan.

The mayor is also working to rein in spending on some students whose private school tuition is paid for by the city when it’s found they can’t receive the same special education services at public schools. 

The cost of what’s known as “Carter” and “Connors” cases – depending on how the money is paid out – has increased 300% over the last decade, according to data obtained by Chalkbeat. Tuition costs can go as high as $144,000 per student.

To address this rising number of students, the Department of Education will invest more money in special education needs, like speech and occupational therapy, the mayor said.

Another major rising cost to the city’s budget is housing vouchers, specifically through the City Fighting Homelessness and Eviction Prevention Supplement, or FHEPS, program. 

The mayor is fighting a legal battle against implementing a package of laws the City Council passed in 2023 to expand eligibility for the vouchers. He promised to put the laws into effect as a candidate, but reversed once he took office due to budget pressures. 

Around 68,000 households rely on CityFHEPS vouchers, while another 47,000 could end up depending on the program if it’s expanded.

Mamdani plans to save $519 million within CityFHEPS, mostly through administrative changes, he said. 

The mayor announced new spending in his budget, including $40 million for the Office of Community Safety and $26 million towards hate crime prevention.

‘Conservative’ on New Spending

Levine, the comptroller, said there was a lot of “good news in this budget” but he was still cautious.

“We are entering into very uncertain economic times because of the threat of a recession and the impact of AI, and I want us to build a very strong fiscal foundation that grows reserves,” he said.

“There still is a reliance on a number of one-shot measures, and those are tools that are then going to be off the table next year. And we are looking at about a $7 billion shortfall for the following fiscal year.”

Levine did praise the mayor for his “pretty modest” additional spending.

Some of the additional money includes $31.7 million to the three library systems, $15 million to the Parks Department, $10 million to cultural organizations and $15 million to the City University of New York.

“It’s been a while since we’ve seen a mayor be this conservative on new spending,” Levine said about the spending. “It reflects why we’re in a better place today than we were in February.”

Mamdani had floated a property tax increase as a last-resort option to raise money to fill the gap, as Gov. Hochul continued to resist raising taxes.

Raising the property tax rate, which has not been done since Mayor Michael Bloomberg, is one of the few levers the mayor has to raise revenue. It was met with immediate backlash and was unlikely to pass in the Council. 

Hochul’s help to the city benefits the whole state, she said at an unrelated event Monday.

“He inherited a pretty significant financial mess,” Hochul said. 

Public Advocate Jumaane Williams took a cautious approach to the promised state aid.

“I think until that budget is passed, you don’t know if all that money is real,” he said following his briefing.

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Gov. Kathy Hochul on Thursday announced a $268 billion state budget deal but the state assembly speaker shot back, saying there was no agreement.

Hochul said the disputed New York state budget agreement included a pied-à-terre tax on luxury second homes, investments in universal child care and more money for police officers on the subway. Her budget did not appear to include additional additional cash to help New York City fix its $5.4 billion deficit.

But Assembly Speaker Carl Heastie later told reporters Hochul had jumped the gun.

“There is no budget deal,” Heastie said, adding, “I don’t care what the governor says.”

“I said to her last night I was comfortable with her saying to y’all we were close  — it is close,” Heastie, of The Bronx, said. “But this is what’s wrong with this process. It’s like, ‘I’m gonna only talk about policy and when I think the legislature is giving me what I want on policy, then we’ll talk about money.’”

Heastie said he planned to send his members home on Thursday.

“We signed off on nothing major,” he said. “I’m never doing this again. Budgets are supposed to be about money, not policy.”

Hochul had no immediate comment.

Nassau County Executive Bruce Blakeman, Hochul’s Republican challenger, said the budget snafu reminded him of the reality show “Deal or No Deal.”

“This is the left hand not knowing what the left hand is doing,” he said of the intraparty squabbling. “The fact of the matter is it’s the height of incompetence, it’s a lack of leadership.”

Budget One Month Late

Hochul’s budget, which was due April 1, is $13 billion more than last year’s and $8 billion more than Hochul initially proposed.

The “general agreement” on the budget was still light on details as the legislature will continue to go over the proposal in the coming days, the governor said.

“I’m not going to mince the words. The negotiations were not easy,” Hochul said.

“There were very substantive disagreements, tough choices and powerful special interests trying to influence the outcome, and the dysfunction out of Washington certainly doesn’t help.”

Here’s what we know about the state budget deal:

• The governor said legislators are finalizing details of on a pied-à-terre tax on luxury second homes to help “close the city’s budget gap without eroding its tax base or burdening hard-working New Yorkers.”

• Hochul said the budget includes her proposal to streamline environmental reviews for housing developments, letting some projects skip a 51-year-old state law requiring an extensive review that often holds up construction. 

• And the budget includes a “super speeder” bill which would require drivers with 16 or more speed-camera tickets over a year to install a device that would limit the car’s speed based on the local speed limit. 

Unanswered Questions

While the top question on Thursday was what led to the public breakdown between Hochul and Heastie — and when a proper deal might emerge — the details of key provisions were still up in the air.

• That second-home tax: It remains to be seen how the pied-à-terre tax would work. Specifically, how would the “value” of a second home be measured? Market values change, and assessed values are wildly out of whack, which could leave many lux pads out. There’s also a question about how to tax second homes owned by LLCs or shell companies. 
• Pension reforms: Hochul teased that she was scaling back plans to enact sweeping pension reform for the more than 700,000 public sector workers on what is called Tier 6, who receive smaller pension benefits than employees hired before 2012. Unions want changes that would cost $1.5 billion a year. It’s not clear how much — or how little — Hochul and the legislature are prepared to expand Tier 6 benefits. 
• Climate law: With qualms about affordability and facing headwinds from the Trump administration’s hostility to renewable energy projects, Hochul has made no secret that she’d like to weaken the state’s ambitious 2019 climate law. Under the budget deal, the governor can now implement those regulations in 2028, while using a different formula to count emissions — making it easier for the state to hit its reduction targets.

Hochul to City: I’ve Done Plenty

Hochul’s announcement did not include additional commitments of state funds for the cash-strapped city. 

Mayor Zohran Mamdani and Council Speaker Julie Menin last week pitched the state on a change to the pass-through entity tax, or PTET, which lets some business people keep state and local tax deductions that were limited by a 2017 federal law. They believe those changes could bring in $1 billion in revenue.

Hochul, who is running for reelection in November, immediately shot it down, and didn’t say whether the proposed budget includes any more of a bailout for the city. 

On Friday, she defended what she’s already doing for the five boroughs, pointing to more than $1 billion to support universal childcare and another $1.5 billion to help close the gap.

“We’ve been asked to do a lot for the city, we’ve given unprecedented amounts of support for the city,” she said.

The City Council approved an extension for Mayor Mamdani’s executive budget, which was due around May 1, because of the tardiness of the state’s budget. 

On Thursday, the mayor – a former state assemblymember –  said he planned to release his executive budget next week as planned. And he expected the city would get what it needed to help close the budget gap.

“I’m feeling hopeful about the direction of those negotiations,” he said at an unrelated press conference. “Those were productive conversations.”

Contributing: Samantha Maldonado, Claudia Irizarry Aponte.

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Gov. Kathy Hochul on Tuesday shot down a request by Mayor Zohran Mamdani and City Council Speaker Julie Menin to change a tax credit to help fill a $5.4 billion city budget deficit.

Mamdani and Menin had asked state lawmakers to authorize changes to the pass-through entity tax, or PTET, which allows some business people to keep state and local tax deductions that were limited by a 2017 federal tax law. The mayor and speaker said the changes would generate an estimated $1 billion in revenue for the city.

But Hochul said she sees the proposed PTET cut as a personal tax increase. 

“That’s why it’s not happening,” she said at an unrelated event outside Albany. “We’re not changing PTET.”

Menin and Mamdani, appearing in the City Hall rotunda at their the first joint press conference since they began their contentious budget negotiations, also announced an extension of the city budget, which is due May 1, until May 12. The state budget, which was due April 1, is nearly a month late.

“A crisis of this scale cannot be solved without state action,” the mayor said. “Speaker Menin and I have already identified meaningful savings and we will continue that work carefully, deliberately and without cutting the services that New Yorkers rely on. But we cannot do it alone.”

Hochul took issue with that framing.

“What you’re doing is independent of our budget process,” she said. “We don’t have to be done in order for you to do yours. We’re on different timetables.” Cities and towns typically set their budgets after the state budget is completed, so they know how much aid they’ll be getting from Albany. 

“I think it’s crystal clear that we already have helped them,” Hochul said, pointing to $4 billion in assistance the state agreed to provide the city in this budget cycle, as well as the agreement for a new tax on luxury second homes in New York City.

Hochul, who is running for reelection this year, said Mamdani and Menin need “to do what every other city has had to do,” by looking at expenses and identifying the line items growing exponentially. 

To save money, Mamdani has floated holding off on mandates to shrink class sizes and is fighting a lawsuit that would require the city to expand its rental voucher system.

He and Menin also asked the legislature to allow the city to reduce planned payments to the city’s five pension funds that are being made to make up for years of underfunding.

“There is no amount of savings that will absolve Albany from the partnership that’s required to get all of us to a balanced budget by the end of this process,” Mamdani said.

Trump Tax Law Work-Around

The PTET was instituted after the 2017 Trump tax cuts that sharply limited the state and local tax deduction. States like New York allowed people who owned closely held businesses or partnerships to pay state and local income taxes directly from their businesses, preserving the full federal tax deduction.

The state and local income tax payments were the same as if they paid the tax on their personal returns, but their federal taxes would be lower. The Mamdani-Menin plan would amount to a state and local tax increase for those people. The leaders said the proposed PTET change, from a full credit to 75%, would be temporary, though they did not name a timeline.

Mamdani described the PTET as “essentially a loophole that allows high-income earners to reduce their federal tax burden.”

In addition to the PTET changes, Menin and Mamdani also called on Albany to restore state Aid and Incentives to Municipalities funding, which the state stopped during the Great Recession of 2007 to 2009. They said it would amount to about $400 million per year.

Hochul, however, threw cold water on that ask, too, saying the state provides AIM funding for municipalities with property tax caps — and New York City does not have such a cap.

Mayor and Speaker Aligned

Menin and Mamdani’s joint request marks a turning point for the duo, who had been in opposition as city budget negotiations took shape.

The Council slammed the mayor’s last-resort pitch in February to increase property taxes, which would require approval from the 51-member body.  

Mamdani later criticized the Council’s response to his preliminary budget, saying their savings plan – which filled a more than $5 billion deficit without taking from the city’s reserves, finding savings elsewhere – was “unrealistic.”

Still, on Tuesday, the two leaders struck the same note, emphasizing that New York City contributes over 55% of the state’s revenues but gets back 42% in return.

“Despite being the economic engine of the state, the city sends billions of dollars to Albany each year and sends more than it receives in return,” Menin said. “We must finally address this imbalance.”

Greg David and Katie Honan contributed reporting.

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This article was published in partnership with New York Focus.

Each spring, Albany lawmakers decide how to spend hundreds of billions in public money in the state’s famously opaque budget process. New York’s budget is bigger than those of most countries, and outpaces that of every other state except California.

At stake are key questions for New York’s future. Will the state weaken its landmark climate law? Will it speed up the process for building new housing? Boost pensions? How will it deal with the Trump administration’s cuts to health care funding, which threaten to leave hundreds of thousands of New Yorkers without health insurance? How will the state fund Gov. Kathy Hochul’s child care expansion?

With lawmakers having already blown past the official April 1 deadline for passing the budget, the answers to these questions — and many others — are coming down to the wire. 

In the coming weeks, we’ll continue to closely cover the secretive process through which the state’s enormous, far-reaching budget is made. We’ll be analyzing dueling priorities, providing updates on the progress of negotiations, and explaining what it all means for New Yorkers across the state. First, we wanted to give readers a sense of how the budget process works and why it matters.

What is the state budget?

The budget is the state’s plan for how it will spend its money over the next year. It comprises thousands of pages of dense legal language spanning subjects from car insurance to agriculture. This year’s budget will likely allocate over $260 billion, with the biggest shares going to health care and education.

Despite its name, the budget isn’t limited to financial decisions; it’s also frequently used to enact laws that don’t involve spending money. Last year’s budget loosened the rules that require prosecutors to speedily share evidence with defense lawyers, and allowed New York to close several prisons. Hochul’s budget proposal this year would partially roll back a landmark 2019 law requiring the state to dramatically reduce carbon emissions and move towards renewable energy in the coming years.

Where does the money come from?

Most of the money spent in the budget comes from the taxes that New Yorkers pay to the state government. But a sizable portion is cash that the federal government gives New York to provide services ranging from highways and transit to health insurance for low-income residents. 

Hochul’s proposal this year adds up to $260 billion. The Assembly’s is $266 billion, and the Senate’s is $270 billion. Once the dust settles and the negotiations are done, the final budget will likely fall somewhere between those totals.

What are the major steps in the budget process?

Here’s the basic outline:

In the first few weeks of the year, the governor issues the “executive budget,” a comprehensive proposal for how the state should spend its funds.

A couple of months later, generally in early to mid-March, each house of the legislature responds with its own proposal, known as the “one-house budgets.”

The three parties enter into weeks of intense negotiations to resolve the differences. They’re supposed to come to an agreement by April 1, which is the start of the state’s fiscal year, but the process can drag on for days or even weeks past the deadline.

When the parties reach a deal, the legislature votes to approve the final budget, which goes to the governor to be signed into law. Everyone takes a deep breath and starts getting ready to do it again the next year.

Although the process is a three-way negotiation, the governor has the upper hand. The executive budget sets the framework for all subsequent discussion, and if legislators try to add additional spending items to the governor’s proposal, the governor can veto each item individually. That doesn’t generally happen, but the threat of a veto can enable the governor to rein in legislators’ desire to spend more.

When the Senate and Assembly issue their response budget proposals in March — also known as the “one-house” budgets — they’re more opening offers for negotiation than actual plans. No one expects that everything in the one-houses will be put into law. But once all three proposals are out, the subjects for debate are clear.

Who are the key players?

Three key parties dominate the process: the governor, the Senate majority leader, and the Assembly speaker. (They have historically been called the “three men in a room” — though two of them are now women.) Along with their senior advisors and staff, they conduct negotiations behind closed doors. Some key legislators also have significant sway, especially if they chair powerful committees or are longtime members who have built up influence over the years.

Most legislators play a limited role. Their main tools to advance their priorities are to pressure legislative leadership and to use public attention. Republicans generally aren’t included in negotiations. Democrats are kept more in the loop: Each house regularly holds “conferences” where legislative leaders and their staff share updates and get feedback from rank-and-file members as they work toward a deal.

How does our process compare to other states?

New York’s budget process is notoriously opaque. In a 2015 analysis by the Center for Public Integrity, New York ranked dead last among all states for accountability and transparency in its budget process. Not much has changed since then, and good government groups still lament the lack of avenues for citizens to have meaningful input or even follow along.

Perhaps the most glaring example of the lack of transparency is how the legislature actually votes on the budget. The mammoth bills are often introduced just hours before the legislature approves them, offering almost no time for lawmakers — let alone the public — to process and react to the final agreements. Voting often doesn’t finish until the middle of the night, when few New Yorkers are watching.

This isn’t how things are supposed to work. Under the state constitution, bills must be introduced three days before a vote happens to leave time for public debate and scrutiny. But the governor can lift this requirement by issuing a “message of necessity,” allowing the bills to go to a vote immediately. These messages of necessity have become an Albany tradition, to the chagrin of government watchdogs.

Is the entire budget up for negotiation?

Although negotiations over the budget get fierce, not everything is up for debate. In fact, most of the negotiations revolve around just a few billion dollars out of the hundreds that the state will spend.

Significant parts of the budget are more or less on autopilot. State agencies, like the Department of Health or State University of New York, need to be funded every year at roughly the same levels. Medicaid and public education are always the two biggest line items, and don’t generally fluctuate dramatically in cost. 

Neither the governor nor the legislature proposed a budgetary solution for New Yorkers set to be disenrolled this summer from the state’s Essential Plan, which offers health insurance to moderate-income people. Other key policy issues, like efforts to prevent law enforcement from collaborating with ICE, were also left out of this year’s budget, though funding for immigrant legal services is likely to get a boost.

Beyond the required categories of spending, many items in the budget are “optional,” and can be slashed as a wide variety of programs compete for limited funds. Animal shelter funding might see a cut one year, or lawmakers might agree to fund a free bus program, among hundreds of options.

How does the public get involved?

The budget process is always accompanied by a flurry of lobbying, activism and advocacy. White-shoe lobbyists lean on lawmakers on behalf of major corporations and industry groups. Advocates hold rallies around the state and in Albany; a favorite spot within the state capitol is the “Million Dollar Staircase,” an enormous and ornate late-19th century structure that got its name from its exorbitant construction cost. The public’s advocacy also frequently includes civil disobedience, with activists often arrested outside the governor’s office or at other key locations.

Another opening for public input is the legislature’s series of budget hearings. Early each year, the legislature’s committees hold marathon hearings on most major topics covered by the budget, such as taxes, housing and education. Any New Yorker can submit written testimony, and the committees select who will be invited to testify in person.

For comprehensive coverage of the current budget proposals, please read, and revisit, the New York Focus 2026 budget guide, which will be updated when the budget is passed.

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Sweeping reforms to New York’s pension system long sought by public sector unions appear likely to be part of the final state budget, with Gov. Kathy Hochul, Assembly Speaker Carl Heastie and State Senate Majority Leader Andrea Stewart-Cousins all publicly backing fixes to what is known as Tier 6.

A controversial reform approved in 2012, Tier 6 slashed pension benefits for public employees hired after April of that year and raised their retirement age to 63, up from 55 for teachers and 62 for other civil servants. 

More than half of public employees in New York now belong to Tier 6, according to the state Comptroller’s office.

The United Federation of Teachers has spearheaded the campaign to unwind some of those measures, including rolling back the retirement age for Tier 6 teachers to 55 after 30 years of service, allowing workers to include overtime earnings to help set pension rates and increasing the state’s contributions to pensions. The reforms are estimated to cost taxpayers $1.5 billion annually.

Hochul spoke in favor of reforming Tier 6 at a massive rally hosted by the union last month.

“Instead of taking the average of five years, we’re taking the average of your three consecutive years,” Hochul said at a UFT rally in Albany on March 8. “We’re taking a shorter vesting period from 10 years down to five. And also, I’m fighting for a fairer pension plan because it’s essential that we continue recruiting people.”

But among the teachers, train operators, sanitation workers and other civil servants in Tier 6 stands a lesser-known group of employees: State lawmakers who have power to push reforms.

Like all New York State employees, lawmakers belong to the state’s pension system. And a growing number of them have been affected by the 2012 changes. Roughly a third of lawmakers currently serving in the state legislature belong to Tier 6, according to a list that THE CITY obtained from the state comptroller’s office via a public records request.

Out of 213 legislators across both the state Senate and Assembly, 74 are in Tier 6, including 11 Republicans.

According to multiple sources and news reports, the biggest obstacles to nailing the state budget — including the UFT’s proposed changes to Tier 6 — are Hochul’s efforts to weaken the state’s sweeping 2019 climate laws and car insurance reform, both of which are opposed by members of her own party.

“Everybody knows. It seems to be stalling everything,” said Michael Mulgrew, the UFT president. Still, he said, the governor understands that Tier 6 is hurting the workforce and making it more difficult for the state and local governments to recruit workers. 

THE CITY spoke to several lawmakers who belong to Tier 6. Though they all said their priority is to the civil servants they represent, they said their pension status has helped inform their position on the issue. 

Assemblymember Jessica González-Rojas (D-Queens)  said that as a Tier 6 member she is “fully aware I have to work longer to get less benefits” upon retirement. 

Claire Valdez, also a Queens Assembly member who is running for New York’s 7th Congressional district, said that her status as a Tier 6 member gives her “solidarity” with the civil servants she represents.

“While I am supportive of these reforms, it really is because workers deserve excellent benefits. That’s the only way we’re going to attract a really qualified workforce that’s going to be here for the long haul and help make our state and city run effectively,” she added. 

The list of lawmakers in Tier 6 includes some prominent Democrats, including state senators Jamaal Bailey, the chair of the Bronx Democratic Party, and Jessica Ramos, a chair of the Senate’s labor committee who ran for mayor last year and is facing a spirited primary to her left from González-Rojas. (Bailey and Ramos did not return THE CITY’s request for comment, but Ramos said on the campaign trail last year that she supports changes to Tier 6.)

Tier 6 also includes nearly all Democratic Socialist of America members elected to the state legislature in recent years, including Valdez and Sen. Jabari Brisport of Brooklyn, a former public school teacher.

Assemblymember Lester Chang of Brooklyn is the lone city Republican on the list of lawmakers belonging to Tier 6. His chief of staff Soya Radin said Chang is evaluating any changes to the state’s pension system on the basis of fiscal responsibility while being “fair to workers.”

Tier 6 was enacted with bipartisan support in the state legislature in an effort spearheaded by then-Gov. Andrew Cuomo. The changes ultimately enacted were controversial from the start, but ultimately more moderate than what Cuomo, then in his first term as governor, said was necessary at a time of fiscal uncertainty and rising pension costs.

In the end he compromised, raising the retirement age to 63 for new hires, banning the use of overtime pay to pad pensions and increasing the employee contribution rates into the state pension system by three percentage points to 6% for the highest earners. New York City was poised to save $21 billion over the next 30 years, state and local officials said at the time, part of an overall $80 billion in projected savings.

Tier 6 has saved taxpayers in state and local governments outside of New York City $1 billion annually since it was enacted, according to a 2021 estimate from the Empire Center for Public Policy, a conservative think tank.

But unions have said the changes amounted to new hires working longer and contributing more to earn a reduced pension.

The push to “fix” Tier 6 also counts a prominent former state lawmaker among its supporters: Mayor Zohran Mamdani, who was elected to the state Assembly in 2020, endorsed the effort on the campaign trail last summer and pointed out he himself is in that tier. 

Brisport, who told THE CITY he’s “very supportive” of the changes to Tier 6, said he’s been heartened by the governor’s support for the issue — but he’s been frustrated by the slow pace of movement on an agreement on pension reform and the state budget in general.

“For my knowledge, there hasn’t been much movement on it,” he said. He added that the projected $1.5 billion annual price tag underscores the need to raise taxes on the wealthiest New Yorkers, which the governor has been reluctant to do.

Hochul insisted that Tier 6 reform is a live issue as recently as last week, though she hasn’t specified which of the UFT’s proposals she actually supports.

“Tier 6 is on the table,” she told reporters in New York City on April 9. “Over half the workforce is now Tier 6, and they have a different dynamic than the people who came before them.”

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Gov. Kathy Hochul on Friday came out with specific measures she’ll propose to state lawmakers in a bid to weaken the state’s climate law as part of the budget process.

New York is behind on implementing the Climate Leadership and Community Protection Act of 2019, which requires the state to drive down planet-warming greenhouse gas emissions and shift away from fossil fuels, touching on nearly every sector of the economy.

In an op-ed published Friday, Hochul proposed changing the law on three counts: requiring already-overdue regulations to drive down greenhouse gas emissions to be issued at 2030’s end, revising the mandates that limit how much carbon the state can spew and switching how the state counts its emissions.

Hochul emphasized she supports the climate law’s intentions, but was moving forward with affordability in mind.

“While I am still committed to working toward our targets, with all the stress our residents are under, New Yorkers expect their elected officials to prioritize affordability,” she wrote. “The fact is, we will be dealing with a White House outright hostile toward renewable energy for at least another three years, making it impossible for us to meet our targets without imposing higher costs on homeowners, renters, and businesses.”

Hochul’s op-ed follows comments she’s been making for years suggesting the state legislature needs to take another look at the climate law. Earlier this month, she pointed to a memo with cost estimates released by the New York State Energy Research and Development Authority to underscore additional expenses households could incur under the climate law.

It remains to be seen how, or whether, state lawmakers will give Hochul what she is looking for and amend the climate law as part of the budget, which is due by April 1. In New York State, the  often policy decisions and laws are negotiated and settled during the budget-making process as opposed to through separate bill-making.

Spokespeople for Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie did not reply to requests for comment on Hochul’s proposals.

A spokesperson for Sen. Pete Harckham (D-Hudson Valley), chair of the State Senate’s environmental conservation committee, declined to comment on negotiations but pointed to a recent op-ed he penned with Sen. Liz Krueger (D-Manhattan), chair of the powerful finance committee, and Sen. Kevin Parker (D-Brooklyn), chair of the energy committee.

“A conversation about anything other than deploying renewable power faster is a diversion from the challenging but essential work of driving down New Yorkers’ bills,” the lawmakers wrote. “There is no doubt that we are behind on our climate targets — but when you’re behind, real leaders don’t quit, they work harder.”

Krueger in a statement said she hadn’t seen “an actual written proposal” from Hochul beyond her op-ed.

“Rather than blowing up yet another budget negotiation with huge last-minute demands, let’s have a constructive conversation about the ways we can move forward together,” she said.

In an interview, Parker said he disagreed with the idea of changing the climate goals.

“There’s other ways to create affordability in the state without moving back the climate goals. I’m looking forward to the conversation with the governor, but I fundamentally have a different position on what the possibilities are and the way forward,” he said.

Minority Leader Sen. Rob Ortt (R-Niagara) criticized Hochul’s move and instead called for a full repeal: “She’s not proposing meaningful changes to Albany’s unaffordable energy policies, but meaningless delays that will do nothing to help lower New Yorker’s utility costs today or in the near term.”

Emissions Challenges

Under the current climate law, New York State must source 70% of its electricity from renewables like solar and wind by 2030, and reduce greenhouse gas emissions 40% below 1990 levels by 2030 (and 85% by 2050).  

Hochul proposed changing the emissions limits and setting a new 2040 benchmark in her op-ed, but didn’t go into details.

The governor in 2023 unsuccessfully attempted to change the formula for how the state measures its emissions as part of the law. The change she sought — and is seeking again — would’ve made it appear as though the state was closer to achieving the climate law’s emissions reductions goals.

Those changes would be in line with how almost all other states count their emissions.

Heather Mulligan, president of the Business Council of New York, in a statement called Hochul’s proposals “reasonable and necessary corrections to avoid onerous and costly mandates based on impractical emission-reduction targets.”

Hochul also wanted to push back when rules for how to reduce emissions were due to be created — though her administration is already behind in issuing them. Environmental groups sued the state to release those regulations, and a state court judge in January directed the state to do so. 

The state is appealing the ruling. Hochul said Monday that implementing regulations as the judge directed would drive up costs for New Yorkers.

Caroline Chen, New York Lawyers for the Public Interest’s director of environmental justice and a co-counsel in the case, on Tuesday expressed confusion as to why Hochul was angling to make changes through the budget process. She emphasized the lawsuit aimed to get the state to “commit to bringing down emissions while protecting affordability and equity.”

The mandates of the climate law have become harder to achieve since New York’s legislature passed it in 2019. The pandemic gave rise to supply chain constraints and inflation, which drove up the costs of clean energy development. On top of that, President Donald Trump’s hostility towards renewable energy, notably with offshore wind, further stymied the state’s progress in building cleaner forms of energy.

Hochul has long been sensitive to anything that could hit New Yorkers’ wallets, including measures that could help the state reach the climate law’s targets. She has embraced an “all of the above” energy strategy that includes fossil fuels for longer than the law foresaw.

Recent events have significantly influenced the prices of fossil fuels, which show up on utility bills and drive up prices of consumer goods. This winter’s cold weather made gas and electricity bills climb, and the war in Iran has spiked the costs of oil, gasoline, diesel and other fuels.

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Data centers demand power. They guzzle water. They may hike energy bills.

In Memphis, for example, a gas-powered data center for artificial intelligence increased local air pollution, gulped about 150 homes’ worth of water in a month and could consume as much electricity as 200,000 homes in a year. In the mid-Atlantic region, data center development significantly drove up utility bills.

New York hasn’t experienced a data center boom yet, but lawmakers are looking to get ahead of a potential proliferation — with affordability at top of mind.

Data centers house machines that process and store digital information. These centers can run crypto-currency mining, AI and other computing activities — and are particularly power-hungry. 

The centers could further tax New York’s strained power grid and hit New Yorkers’ wallets. 

States like Texas and Virginia have led the way in data center expansion, with New York lagging behind. There are less than 20 large data centers around the state, according to various trackers. But New York could see major growth.

The New York State Independent System Operator (NYISO) estimates electricity demand could increase by nearly 70% by 2030, thanks to the expansion of electric heat and other electric systems in buildings, as well as large projects like data centers. Dozens of other projects have collectively requested to pull thousands of megawatts of power from the state’s grid. 

“It’s a concern because we’re not adding commensurate supply to meet that forecasted demand,” said Kevin Lanahan, vice president of external affairs at NYISO, which operates the grid. 

About 30 projects that could become possible data centers requested connections to the grid between 2020 and the end of 2025, according to an analysis by THE CITY of data from NYISO. The average size for each of those projects is nearly 300 megawatts.

For comparison, Empire Wind, the in-progress offshore wind project that has the potential to power half a million New York City homes, has a capacity of 810 megawatts.

The expansion of centers without adequate upgrades to the grid and enough energy supply could jeopardize the reliability of power. But the cost of investing to accommodate data centers could end up being passed to consumers. That’s because utilities companies like Con Edison are allowed to make a return on investments into the system that delivers the energy, which shows up as rate hikes on customer bills. 

Gas generates the majority of the city’s electricity, so as gas becomes more expensive due to increased demand, electricity bills can climb too. (While your energy bills have likely spiked this winter, data centers aren’t to blame just yet.)

Getting Ahead of the Grid 

Gov. Kathy Hochul has floated proposals to protect ratepayers from the cost of future data centers. She wants to require data centers to provide their own power so they’re not taxing the grid, or to pay a premium to make sure regular customers don’t pay more. (On the federal level, lawmakers have introduced legislation that aims to do the same thing.)

Hochul also directed the state Public Service Commission, which oversees utilities, to examine how projects with large demands for energy connect to the grid and pay for expansion.

New York lawmakers proposed a bill that would impose a moratorium on some new data centers — those over 20 megawatts — for three years, during which time the state could create regulations to address the centers.

Sen. Liz Krueger (D-Manhattan), who sponsors the bill, said the moratorium would allow New York to prepare for the energy-gobbling facilities.

“It’s time to hit the pause button, give ourselves some breathing room to adopt strong policies on data centers and avoid getting caught in a bubble that will burst and leave New York utility customers footing a huge bill,” Krueger said in a statement.

More than 100 environmental and community organizations, coordinated by Food and Water Watch, signed on to a letter penned earlier this month urging for the moratorium. 

Alex Beauchamp, northeast region director at Food and Water Watch, said a moratorium would allow New York the time to approach the “thorny policy problems” posed by data centers.

“Tech is seeking to go fast, and our regulators don’t go that fast so, at a bare minimum, we’re hoping to pause to figure this out,” he said. 

But the Digital Chamber’s Digital Power Network, a coalition representing Bitcoin miners, has lobbied to oppose the moratorium, arguing the state would miss out on building important infrastructure and that data center growth could actually prove beneficial to the grid.

“If the moratorium were to pass, New York would be forfeiting one of its most critical grid assets along with the benefits associated with the industry,” said Sonya Murphy, senior policy associate at the network, in a statement. 

Hochul hasn’t said whether she supports the moratorium idea. 

New Power Generation

Most of the proposed data centers — or possible data centers, as NYISO’s data doesn’t always indicate the details of each project — are not in New York City, but upstate. Still, upstate growth of data centers and other energy-guzzling projects could affect residents of the five boroughs because the power systems are interconnected, said Lanahan, of NYISO.

“Much of the generation that New Yorkers are consuming is coming from upstate,” he said. “If there’s increased consumption and stress on the system in Westchester County or north, that can impact the price and the reliability for city residents.”

There’s one possible data center close to New York City, at the location of the former Indian Point nuclear plant in Westchester County — though that plan is not set in stone, said Patrick O’Brien, director of government affairs and communications at Holtec International.

O’Brien said the company inquired whether there’s enough power available for operating a data center there as part of a concept to reuse a decommissioned site, but would need to do more work and find a partner to actually move forward.

That’s the only project that has been floated in Con Ed’s territory so far, and the utility company — which serves gas and electric customers in New York City and Westchester — said it’s preparing.

“Our existing rules and processes have mechanisms in place to appropriately balance the impacts of bringing new customers onto the grid,” said Jamie McShane, a Con Ed spokesperson. “We are working with our regulator, the NYISO and other stakeholders to evaluate the impacts of large energy users on the grid, while ensuring other customers are protected from unreasonable costs.”

Vivek Shastry, a senior research associate at Columbia University’s Center on Global Energy Policy, said data centers are becoming more efficient and offer possible benefits. For instance, the excess heat data centers give off can be used to heat nearby buildings and homes.

“There has been a voluntary shift from a lot of companies: for example, Microsoft and Anthropic came out and said that they want to be a good neighbor and want to pay their fair share of the costs,” Shastry said. “But at the same time, it’s really up to the public service commissions and the utilities to determine how much of those costs and how to allocate the relevant pieces of those costs to the data centers.”

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The head of the MTA said Friday that the transportation authority and its riders are being taken for a nearly $50 million ride each year as a result of questionable claims from so-called billboard lawyers who “seem to think the MTA is actually spelled ATM.”

Chairperson and chief executive Janno Lieber pointed to a new analysis from the MTA that cites how Gov. Kathy Hochul’s proposal to cut auto insurance costs in New York State could keep the transit agency from being forced to dole out “windfall payouts” for crashes in which its bus operators are not primarily to blame.

“These folks try to find a nearby MTA bus to blame even when our bus drivers —  who work their tails off and follow the rules — are not at fault,” Lieber said. “We are, after all, the deep pocket.”

Speaking at a Harlem depot with Lieber and state transportation chief Marie Therese Dominguez, Hochul touted her proposed auto insurance reform package that she says could keep transit agencies across the state from being easy targets for unscrupulous claims. The governor pinned surging auto insurance premiums on an 80% spike in fraud claims since 2020. 

“That’s inexplicable, how is that happening?” Hochul said. “Well, I’ll tell you why: because there are criminals out there trying to scam the system and it has to stop.”

Hochul’s hoped-for insurance reforms are designed to keep public transportation providers, and everyday motorists, from being easy targets for big paydays as a result of crashes in which other motorists are to blame.

“What’s happening now is if they can get a jury to say the MTA was 1% responsible, we’re responsible for the entire damages,” Lieber said. “And frequently, the other guys don’t even have insurance, so it’s a huge number.”

He cited one example where an MTA bus was struck while legally in an intersection by a driver who blew through a stop sign.

“Somehow or another, his lawyer convinced the jury that the MTA was 5% responsible and then was on the hook because the dude who blows the stop sign doesn’t have that much insurance … That’s the type of crazy situation that we’re facing,” Lieber said.

The MTA estimates it could save $50 million yearly car-crash litigation, with officials saying that money could instead be directed to service upgrades for bus and subway routes.

“Taxpayers are the ones who left footing that bill,” Lieber said. “That money is coming out of what should be all kinds of good stuff.”

The governor’s insurance proposal has drawn criticism from advocates for crash victims and was omitted from the individual spending plans of both houses of the state legislature, released in the past week. But Hochul said she is optimistic that it will be included in the state budget that must be approved by April 1.

“The legislature knows my priorities,” she said. “There is an absolute way to have all of this accomplished together before the end of the budget process, before the deadline.”

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More than 400 nurses at the Brooklyn Hospital Center, where officials warned of a dire financial hole, have been cut off from health insurance coverage for six weeks, according to their union.

Gov. Kathy Hochul provided $15 million in emergency state aid recently to the financially strapped 181-year-old community hospital that borders Fort Greene Park, multiple sources told THE CITY. Hospital officials requested $160 million last fall, and the $15 million is not enough to restore health benefits for the nurses, according to the New York State Nurses Association. 

Officials with the nurses union told THE CITY that workers feel targeted by hospital administrators’ decision not to pay into their health care fund. Nurses are the only hospital  employees without coverage; doctors, administrative staff and other workers have been unaffected.

“You chose the nurses, the one group of people that actually show up — rain, sun, sleet, snow,” said Rehana Lowtan, a nurse educator who began her career at the hospital 20 years ago. “We have nurses here that have serious medical conditions. They have families that are on their plans that don’t have access to any kind of care right now.” 

The nurses who spoke to THE CITY said they do not know when, or if, coverage will be reinstated. 

“There’s no communication,” said Yvette Byer-Henry, a certified nurse midwife who has worked at the hospital for 25 years. “It just reeks.”  

A spokesperson for the hospital, Zack Fink, said the facility is “working closely with NYSNA and the Hochul administration on a solution.”

“The Brooklyn Hospital Center values our NYSNA represented nurses and recognizes that medical benefits are an essential part of supporting our colleagues and their families. The immediate issue is securing the funds necessary to continue covering those medical benefits,” he said in a statement.

The hospital has requested additional money from the state on top of the $74 million it received in 2025. The plea for help comes as the facility considers bankruptcy, the hospital’s chief executive Gary G. Terranoni, told Spectrum News in November.

Bill Hammond, a senior fellow for health policy at the Albany-based think tank the Empire Center, called the hospital’s failure to pay nurses’ benefits “a move of desperation” that could show the governor it needs the requested aid.

“That would communicate to the state we are in deep trouble, and it would turn the nurses into your allies for pushing the state for money,” he said. “If that is their strategy that would be using them as a bargaining chip.”

The State and the Safety Net

Assemblymember Phara Souffrant Forrest (D-Brooklyn), said the reality of safety net hospitals necessitates state aid, explaining that Medicaid reimburses the hospital below the cost of its care. 

“The reimbursement rates are not on par with the care that is being given,” she said. 

“Ultimately, the responsibility rests with the state that hospitals like Brooklyn Hospital Center should be made whole,” added Souffrant Forrest, who has worked as a nurse. “Unfortunately, the governor is trickling in funding. She did make the choice not to include increases in safety net funding overall in last year’s budget.”

Hochul’s office did not respond to a request for comment.

Brooklyn Hospital Center’s nurses averted a strike in January by coming to a tentative agreement on a labor contract with management. The terms included the hospital fully providing the nurses’ health care and pension benefits.

The nurses, who said they were unaware that the hospital had not paid the benefits fund since November, accepted the contract, but it has not yet been ratified.

“If they are in a financial crisis, [hospital officials] should not be making promises they can’t keep,” Hammond said.

Byer-Henry told THE CITY the hospital has failed to make monthly payments to the benefit fund in the past, but this is the first time nurses have lost health care.

“When you made the decision to not pay one portion of your employees’ benefit, what was your thinking going forward?” Byer-Henry said. “Because you can’t run a hospital without nurses — nurses are the backbone of the hospital.” 

Brooklyn Hospital Center is a safety net hospital and is not affiliated with large providers such as Mount Sinai Health System or Northwell Health.

Instead, its primary source of income is from its patients. About 80% are covered by Medicaid and Medicare, where the hospital receives its reimbursement and funding, according to a recent report from the Healthcare Association of New York State. 

President Donald Trump’s recent cuts to Medicaid have hurt safety net institutions like Brooklyn Hospital. 

According to Hammond, the request for state aid also points to a broader issue of hospitals relying on the state for emergency bailouts, rather than having long-term plans to solve their fiscal problems. 

“That makes it more likely that hospitals will get in financial trouble in the future because they have a reasonable expectation they can squeeze money out of the state,” he said.

The nurses at Brooklyn Hospital Center currently face what Hammond called, “a very painful irony” — confronting the health care system every day while not having coverage for medical care themselves. 

Byer-Henry said she continues to show up at the hospital to work, despite the changes in her insurance. She previously thought her husband’s insurance would cover her, but found out on Wednesday it would not.

“I do it because I love my patients,” she said. “A lot of my patients don’t want to see anyone else.”

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